By Arsheeya Bajwa and Deborah Mary Sophia
(Reuters) -Intel CEO Pat Gelsinger's removal has put an abrupt end to his role in the struggling chipmaker's turnaround efforts, leaving Wall Street with doubts whether his ambitious revival plan is headed for the chopping block.
A change at the top after a tumultuous year was cheered by investors as Intel (NASDAQ:INTC) shares rose as much as 6% following the news, before it closed down 0.5% on Monday.
The shares have slumped more than 50% this year as it loses out on an AI-fueled rally in chipmaking peers. Nvidia (NASDAQ:NVDA) has become the second most-valuable company in 2024, while Intel's market capitalization dropped below $100 billion for the first time in 30 years.
Intel struggled under Gelsinger as his plan to increase focus on its money-losing contract manufacturing business hurt cash flow.
Despite the spending spree, it failed to keep up with peers in an AI race and trailed Taiwan's TSMC in chip manufacturing.
The company had also missed out on an investment in AI juggernaut OpenAI, while Gelsinger's comments on Taiwan cost Intel its discounted chipmaking deal with TSMC.
Intel's revenue shrank to $54 billion in 2023, down nearly one-third from the year Gelsinger took over.
Wall Street's earnings expectations for the company too have fallen sharply, giving the stock an elevated forward price-to-earnings ratio - a benchmark for valuing stocks.